Assured Mutual Dependence

Mareeg.com-LONDON – During the Cold War, the certainty of “mutually assured destruction”
steered the nuclear arms race away from catastrophe: a would-be attacker would face
immediate retaliation, inevitably ending in both sides’ annihilation. Today, a very
different race is taking place – a race for the earth’s vital resources, and it
threatens to undermine stability in key regions of the world. The growing dependence
of countries on one another’s food, water, and energy requires that the global
response to sustainability is taken to the highest political level.

Unlike the nuclear arms race of the twentieth century, the resource-security agenda
is not linear. Mutually assured destruction was explicitly acknowledged during the
Cold War in statements from both sides. In the race for resources that defines the
twenty-first century, no actor is directly or indirectly threatening other players
to curtail food or energy exports, but all bear the systemic risks.

Countries have become unavoidably interdependent, and climate change, water stress,
and the loss of ecological resilience all increase the volatility of this mutual
dependence. In a world of limited and scarce resources, countries and companies will
be forced to make decisions that affect one another’s security.

In order to navigate this interdependence, the Earth Security Index 2014, produced
by the Earth Security Initiative, shows countries’ combined vulnerabilities that
might increase the risk exposure of governments and companies, unless more strategic
approaches and sustainable investments are put in place. The ESI identifies four
areas of mutual dependence that will likely shape global security in the coming
decades:

·         Choke points. Countries’ growing demand for energy, water, food, and land
cannot be satisfied without incurring tradeoffs among limited available resources.
Choke points are reached when the available resources are insufficient to satisfy
demand. In China and India, for example, this means that in certain regions there
may not be enough water in the short term to run coal-fired thermal power stations
and irrigate large fields to grow crops. In China, 60% of planned coal-fired power
plants will be built in water-stressed regions.

·         Food. The growing dependence of many countries on food, water, and energy
imports creates new opportunities for trade and investment, but it also exposes
countries to critical vulnerabilities. Australia, for example, is a large coal
exporter but imports most of its refined fuels and holds just three days of fuel
stockpiles. The challenges of mutual dependence are particularly acute with respect
to food. As the ESI shows, some countries – including Egypt, Peru, and the United
Arab Emirates – are heavily dependent on cereal imports from a small number of
suppliers.

Moreover, grain suppliers’ exposure to extreme weather may compromise their ability
to sustain supplies, with knock-on effects for import-dependent countries. In 2010,
for example, Russia imposed an export ban on wheat, following a severe drought. The
resulting food-price increases are believed to have played a role in Egypt’s
revolution.

·         Teleconnections. Anticipating systemic ecological risks will be
increasingly important for sectors such as reinsurance and infrastructure
investments. “Teleconnections” refer to weather events that are related to one
another over large geographic distances. They are well known to science but not
properly discussed by the industries, investors, and governments whose security
depends on environmental stability.

For example, tropical rainforests play a crucial function in maintaining stable
weather and rainfall, acting as a “pump” that helps moisture travel between
different regions. Deforestation can thus have a destabilizing effect on weather
patterns, amplifying the frequency and severity of extreme events such as floods and
droughts.

The resulting liabilities to key industries and the financial sector are clear. In
Brazil, for example, deforestation in Amazonia has slowed significantly over the
last five years, but Brazil has already lost more than 11 million hectares of
rainforest; its exposure to extreme weather has also steadily risen, with floods
causing $4.7 billion in losses in 2011 alone.

·         Land productivity bottlenecks: Agriculture systems are reaching resource
limits, and persistent governance gaps compromise their ability to ensure food
security, dignified livelihoods, and ecological stewardship. Companies, investors,
governments, and communities confront a series of critical barriers to increasing
the food availability that the world needs: Local populations’ insecure land
ownership; receding water tables, owing to unsustainable extraction rates;
inefficient use of pollution-causing inputs like fertilizers and pesticides; the
loss of vital ecosystems, affecting the resilience of food production; and certain
areas’ inability to cope with extreme weather.

In some regions of India, for example, these issues are playing out in tandem.
Insecure land tenure acts as a disincentive for smallholder farmers to commit to
productivity-enhancing investments; water extraction rates are depleting aquifers as
a result of permissive policies; and food security remains out of reach for millions
of people, despite rapid economic growth in urban areas. Countries and companies
will increasingly need to invest in sustainable land in order to hedge their
resource risks.

In 2015, global frameworks are due to be agreed to address climate change,
coordinate responses to natural disasters, and guide the world’s development agenda.
Some of these multilateral processes – in particular, those seeking an ambitious
global climate agreement – appear to be moving in slow motion and against the grain
of geopolitical interests.

In the past, the case for high-level nuclear governance was urgent and clear, but
required processes for creating a common understanding of risks and opportunities
across national borders. Successful multilateral responses, like the Nuclear
Non-Proliferation Treaty, continue to be supported by more flexible global
platforms, such as the Nuclear Threat Initiative, based on relationships and trust
established outside the box of formal multilateralism.

This year, as world leaders discuss the next generation of sustainability,
development, and climate frameworks, they will need to put their security and mutual
dependence at the heart of the responses. Here, too, the world will need to create
informal platforms that supplement traditional multilateralism.

In particular, the outdated divisions between rich and poor countries and their
responsibilities must be revised. As new powers like China, Brazil, India, and other
G-20 economies bid to reform global governance systems, their vulnerability to
resource security must invigorate these processes. Only then will the world be on
track to improve the security of all.

Alejandro Litovsky is the Founder and CEO of the Earth Security Initiative.
Michael Schaefer is the Chairman of the BMW Foundation and former Ambassador of
Germany to China.

Copyright: Project Syndicate